Ballantyne Strong, Inc. (NYSE MKT: BTN):
| Conference call: | Today – May 8 at 11:00 a.m. ET | |
| Webcast / Replay URL: | http://www.strong-world.com(Investor Relations section) | |
| The replay will be available on the Internet for 90 days. | ||
| Dial-in number: | 800-762-8795 ; conference ID 4681716 or “Ballantyne Strong” | |
Ballantyne Strong, Inc. (NYSE MKT: BTN), a diversified provider of digital technology services, products and solutions, today reported financial results for the first quarter ended March 31, 2014.
Net revenues were $22.0 million in the first quarter of 2014, compared with $27.6 million in the same period of the prior year. Net loss totaled $0.6 million, or ($0.04) per share, in the first quarter of 2014, compared with net income of $0.6 million, or $0.04 per diluted share, in the same period of the prior year.
Gary L. Cavey, President and CEO of Ballantyne Strong, commented, “Although total revenues were impacted by seasonal weakness in the first quarter, we are very pleased with the improvement we are seeing in gross margin as a result of the growth in our Managed Services segment. For the first quarter of 2014, Managed Services increased to 38% of our total revenue, up from 9% in the same period of the prior year. This helped drive a nearly five percentage point improvement in our gross margin to 19.1%.
“We continue to introduce new products that will drive organic revenue growth. We recently introduced our Integrated Cyber Screens, a new line of smaller motorized screens that will enable us to offer our world-class big screen quality to the professional audiovisual market for the first time. The Integrated Cyber series is designed for use in smaller venues such as conference rooms, media rooms, museums, schools and worship facilities. This new product line will open up an entirely new market for us that we believe can help drive continued growth in our screen business in the years ahead,” said Mr. Cavey.
Q1 2014 Financial Summary
Managed Services revenues were $8.4 million in the first quarter of 2014, compared with $2.5 million in the same period of the prior year. The increase is attributable to the acquisition of Convergent Media Systems.
Systems Integration revenues were $14.0 million in the first quarter of 2014, compared with $25.5 million in the same period of the prior year. The decline is primarily attributable to the continued softening in demand as the cinema industry’s shift to a digital equipment platform.
Consolidated gross profit was $4.2 million in the first quarter of 2014, compared with $3.9 million in the same quarter of the prior year. Gross margin was 19.1% in the first quarter of 2014, compared with 14.2% in the same quarter of the prior year. The improvement in gross margin was primarily attributable to a higher contribution of Managed Services revenue within the overall sales mix.
Selling, general and administrative expenses (SG&A) were $5.4 million in the first quarter of 2014, compared with $3.4 million in the same quarter of the prior year. The increase in SG&A was attributable to the addition of Convergent’s operations.
Balance Sheet and Cash Flow Update
Ballantyne’s cash and cash equivalents balance at March 31, 2014 was $25.5 million, a decrease from $28.8 million at the end of the prior quarter. The decrease in cash and cash equivalents balance was primarily attributable to a decrease in accounts payable.
About Ballantyne Strong, Inc. (www.strong-world.com)
Ballantyne Strong designs, integrates, and installs technology solutions for a broad range of applications; develops and delivers out-of-home messaging, advertising and communications; manufactures projection screens and lighting products; and provides managed services including monitoring of networked equipment. The Company focuses on serving the retail, financial, government and cinema markets.
Forward-Looking Statements
Except for the historical information in this press release, it includes forward-looking statements that involve risks and uncertainties, including but not limited to, quarterly fluctuations in results; customer demand for the Company’s products; the development of new technology for alternate means of motion picture presentation; domestic and international economic conditions; the management of growth; and other risks detailed from time to time in the Company’s Securities and Exchange Commission filings. Actual results may differ materially from management’s expectations.
-tables follow-
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| Three Months Ended March 31, 2014 and 2013 | ||||||||
| (In thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| 2014 | 2013 | |||||||
| Net product sales | $ | 14,834 | $ | 25,196 | ||||
| Net service revenues | 7,187 | 2,425 | ||||||
| Total net revenues | 22,021 | 27,621 | ||||||
| Cost of products sold | 12,450 | 21,593 | ||||||
| Cost of services | 5,355 | 2,114 | ||||||
| Total cost of revenues | 17,805 | 23,707 | ||||||
| Gross profit | 4,216 | 3,914 | ||||||
| Selling and administrative expenses: | ||||||||
| Selling | 1,546 | 866 | ||||||
| Administrative | 3,893 | 2,501 | ||||||
| Total selling and administrative expenses | 5,439 | 3,367 | ||||||
| Gain (loss) on sale or disposal of assets | 7 | 2 | ||||||
| Income (loss) from operations | (1,216 | ) | 549 | |||||
| Equity in income (loss) of joint venture | 95 | (106 | ) | |||||
| Other income (expense): | ||||||||
| Interest income | 177 | 22 | ||||||
| Interest expense | (9 | ) | (7 | ) | ||||
| Other income (expense), net | 209 | 248 | ||||||
| Total other income (expense) | 377 | 263 | ||||||
| Earnings (loss) before income taxes | (744 | ) | 706 | |||||
| Income tax benefit (expense) | 150 | (141 | ) | |||||
| Net earnings (loss) | $ | (594 | ) | $ | 565 | |||
| Basic earnings (loss) per share | $ | (0.04 | ) | $ | 0.04 | |||
| Diluted earnings (loss) per share | $ | (0.04 | ) | $ | 0.04 | |||
| Weighted average shares outstanding: | ||||||||
| Basic | 14,026 | 13,979 | ||||||
| Diluted | 14,026 | 14,023 | ||||||
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| March 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 25,491 | $ | 28,791 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $759 and $703, respectively) | 16,511 | 20,047 | ||||||
| Inventories: | ||||||||
| Finished goods, net | 10,597 | 10,949 | ||||||
| Work in process | 359 | 345 | ||||||
| Raw materials and components, net | 4,304 | 3,891 | ||||||
| Total inventories, net | 15,260 | 15,185 | ||||||
| Recoverable income taxes | 3,445 | 2,207 | ||||||
| Other current assets | 5,500 | 5,873 | ||||||
| Total current assets | 66,207 | 72,103 | ||||||
| Property, plant and equipment (net of accumulated depreciation of $5,007 and $4,781, respectively) | 14,202 | 14,721 | ||||||
| Note receivable | 2,611 | 2,497 | ||||||
| Intangible assets, net | 939 | 895 | ||||||
| Goodwill | 1,080 | 1,123 | ||||||
| Other assets | 3,672 | 4,105 | ||||||
| Total assets | $ | 88,711 | $ | 95,444 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,483 | $ | 12,844 | ||||
| Accrued expenses | 4,962 | 6,236 | ||||||
| Customer deposits/deferred revenue | 3,621 | 3,474 | ||||||
| Income tax payable | 496 | 888 | ||||||
| Total current liabilities | 18,562 | 23,442 | ||||||
| Deferred revenue | 2,643 | 3,008 | ||||||
| Deferred income taxes | 755 | 790 | ||||||
| Other accrued expenses, net of current portion | 1,781 | 1,748 | ||||||
| Total liabilities | 23,741 | 28,988 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, par value $.01 per share; Authorized 1,000 shares, none outstanding | — | — | ||||||
| Common stock, par value $.01 per share; Authorized 25,000 shares; issued 16,869 shares at March 31, 2014 and December 31, 2013, respectively; 14,138 shares outstanding at March 31, 2014 and December 31, 2013, respectively | 167 | 167 | ||||||
| Additional paid-in capital | 38,332 | 38,231 | ||||||
| Accumulated other comprehensive income: | ||||||||
| Foreign currency translation | (1,989 | ) | (959 | ) | ||||
| Postretirement benefit obligations | 190 | 190 | ||||||
| Retained earnings | 46,509 | 47,066 | ||||||
| 83,209 | 84,695 | |||||||
| Less 2,731 of common shares in treasury, at cost at March 31, 2014 and December 31, 2013 | (18,239 | ) | (18,239 | ) | ||||
| Total stockholders’ equity | 64,970 | 66,456 | ||||||
| Total liabilities and stockholders’ equity | $ | 88,711 | $ | 95,444 | ||||
| Ballantyne Strong, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| Three Months Ended March 31, 2014 and 2013 | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities: | ||||||||
| Net earnings (loss) | $ | (594 | ) | $ | 565 | |||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
| Provision for doubtful accounts | 69 | 30 | ||||||
| Provision for obsolete inventory | (8 | ) | 24 | |||||
| Provision for warranty | (134 | ) | 106 | |||||
| Depreciation and amortization | 434 | 338 | ||||||
| Equity in (income) loss of joint venture | (95 | ) | 106 | |||||
| Loss on forward contracts | 348 | — | ||||||
| (Gain) loss on disposal or transfer of assets | (7 | ) | 2 | |||||
| Deferred income taxes | 519 | (10 | ) | |||||
| Share-based compensation expense | 101 | 95 | ||||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||||||||
| Accounts, unbilled and notes receivable | 3,709 | 6,010 | ||||||
| Inventories | (179 | ) | (2,773 | ) | ||||
| Other current assets | (200 | ) | 821 | |||||
| Accounts payable | (3,314 | ) | (1,810 | ) | ||||
| Accrued expenses | (1,343 | ) | (315 | ) | ||||
| Customer deposits/deferred revenue | (208 | ) | (859 | ) | ||||
| Current income taxes | (1,599 | ) | (444 | ) | ||||
| Other assets | (56 | ) | 43 | |||||
| Net cash (used in) provided by operating activities | (2,557 | ) | 1,929 | |||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (258 | ) | (73 | ) | ||||
| Proceeds from sales of assets | 56 | 2 | ||||||
| Net cash used in investing activities | (202 | ) | (71 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from employee stock purchase plan | — | 4 | ||||||
| Net cash provided by financing activities | — | 4 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (541 | ) | (167 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (3,300 | ) | 1,695 | |||||
| Cash and cash equivalents at beginning of year | 28,791 | 40,168 | ||||||
| Cash and cash equivalents at end of year | $ | 25,491 | $ | 41,863 | ||||
Contacts:
Mary A. Carstens
Chief Financial
Officer
402-453-4444
or
Financial Profiles
Tricia
Ross, 916-939-7285
tross@finprofiles.com
